Helsinn v. Teva and the Status Quo: The Federal Circuit Opines on the Scope of the AIA's On-Sale Bar

In a case of first impression, the Federal Circuit recently interpreted the scope of the “on sale” bar under 35 U.S.C. § 102(a)(1) of the America Invents Act (AIA). In Helsinn Healthcare v. Teva Pharmaceuticals, the court held that “after the AIA, if the existence of the sale is public, the details of the invention need not be publically disclosed in the terms of the sale.” In holding such, the court has endorsed application of pre-AIA case law to patents governed by the AIA. But the court limited its holding to public sales and declined to address open questions regarding the AIA’s treatment of private commercial sales.

The District Court Decision

Helsinn Healthcare sued Teva Pharmaceuticals for infringing four patents — one of which was governed by the AIA. Teva argued that the patents were invalid under the on-sale bar in view of a License Agreement and a Supply and Purchase Agreement (the Agreements) that Helsinn entered into with MGI Pharma, Inc. before the critical date. Under the Agreements, MGI agreed to pay Helsinn an upfront fee and future royalties for distribution of products in the United States. MGI also agreed to purchase exclusively from Helsinn, and Helsinn agreed to supply two doses of pharmaceutical products, or whichever of the two dosages were approved for sale by FDA.

The district court found that, for the three patents governed by pre-AIA law, the Agreements were contracts for a future sale, but the sale was not an invalidating sale under § 102(b) because the invention was not ready for patenting before the critical date. For the patent governed by the AIA, the district court found that the AIA changed the meaning of the on-sale bar by adding the phrase ‘‘or otherwise available to the public’’ to § 102(a)(1). As a result, § 102(a)(1) “requires a public sale or offer for sale of the claimed invention”; and, in order to be “public,” a sale must publicly disclose the details of the invention. Applying the law to the facts, the court found that — although Helsinn disclosed a redacted version of the Agreements via a public SEC filing — the filing did not disclose the specifics of the pharmaceutical product and therefore the sale was not, under the AIA, considered an invalidating public sale or offer for sale.

The Federal Circuit’s Reversal

On appeal, Teva and various amici argued for the status quo: Congress did not change the meaning of the on-sale bar. Helsinn, the USPTO, and other amici argued that the district court was correct to conclude that the AIA changed the scope of the on-sale bar. More specifically, they argued that “the on-sale bar now does not encompass secret sales and requires that a sale make the invention available to the public in order to trigger application of the on-sale bar.” To support their position, they cited various floor statements made by members of Congress.

The Federal Circuit reversed the district court and distinguished the floor statements as ones focused on “public use” rather than “on sale.” “[A]t most the floor statements show an intent ‘to do away with precedent under current [§ 102] law’.” However, the Federal Circuit continued, the floor statements only referred to “cases involved in a public use, where the invention was not, as a result of the use, disclosed to the public.” The Federal Circuit noted that “the floor statements do not identify any sale cases that would be overturned by the amendments,” and that even if the floor statements were intended to overrule the secret or confidential sale cases, they were immaterial here because the Agreements were publicly announced.

Regarding the district court’s finding that the SEC filing did not disclose the specifics of the pharmaceutical product and therefore did not constitute an invalidating public sale, the Federal Circuit identified a number of pre-AIA cases applying the on-sale bar to public commercial sales that were applicable to determining the scope of “on sale” under the AIA. The Federal Circuit pointed to Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315 (Fed. Cir. 1999) as an example of case law holding that the on-sale bar applies even when members of the public are unaware that the product sold embodies the claimed invention. Abbott held that, “[i]f a product that is offered for sale inherently possesses each of the limitations of the claims, then the invention is on sale, whether or not the parties to the transaction recognize that the product possesses the claimed characteristics.” The court also pointed to RCA Corp. v. Data Gen. Corp., 887 F.2d 1056 (Fed. Cir. 1989), which found that a non-confidential sale or offer for sale can be invalidating—even if little to no details are disclosed about the claimed invention. The Federal Circuit found that “[t]here is no indication in the floor statements that theses members intended to overrule these cases.”

Consistent with pre-AIA law, the Federal Circuit concluded that “after the AIA, if the existence of the sale is public, the details of the invention need not be publically disclosed in the terms of the sale.” Thus, unless this decision is overturned or overruled, a public disclosure of a sale or offer to sell an invention prior to one year before the filing of a patent application exposes the invention to the on-sale bar to patentability under the AIA.

Open Questions

The Federal Circuit left open questions regarding whether certain non-public activities subject inventions to the statutory bars under the AIA. In particular, the Federal Circuit did not decide whether the AIA intended to overturn case law regarding secret or confidential sales. However, as highlighted in Helsinn, the lack of sale cases mentioned in Congress’ floor statements hints at a future finding that a private commercial sale of an invention exposes the invention to the on-sale bar under the AIA. 

Further, the Federal Circuit specifically declined to address whether the AIA overturned pre-AIA § 102 precedent regarding invalidating public uses “where the invention was not, as a result of the use, disclosed to the public.” However, the Federal Circuit noted that the cases explicitly referred to in the floor statements each involved such public uses. Thus, it seems at least possible that the Federal Circuit could find that, under the AIA, such public uses no longer subject inventions to a statutory bar under § 102(a)(1). In any case, until given clearer guidance, it may not be wise to rely on the USPTO’s view that secret-sale or -use activity does not qualify as prior art.¹

¹ 78 Fed. Reg. 11,059 11,062.